Wednesday, March 15, 2017

Russia’s largest carmaker sets its sights on Cuba

Russia's largest carmaker sets its sights on Cuba
March 15, 2017 ANNA TRETYAK, SPECIAL TO RBTH

2017 is the year when Russia's top carmaker returns to the Caribbean
island after 12 years away. But experts are skeptical whether the
impoverished socialist nation can become a major market for AvtoVAZ.

Visitors sit inside a Lada Vesta car, Moscow, March 14, 2016. Source:
Reuters
In May, Russia's leading automobile manufacturer AvtoVAZ plans to
deliver a batch of about 300 Lada cars to Cuba, said the company's
president Nicolas Maure, speaking at an AvtoVAZ presentation for Cuban
transport companies in Havana, reported TASS.

"Last time we sold Cuba new cars was 12 years ago, and so the question
now is how we can return to this market," said Maure, adding that for
now it's just two models - Vesta and Largus.

"AvtoVAZ is interested in Cuba's car market because there's big demand
here; moreover Cuba's ban on imports of new cars was lifted relatively
recently," said Yevgeny Yeskov, chief editor of the website
AvtoBusinessReview.

For half a century the bulk of the local car market consisted of
secondhand American and Soviet cars. Cubans know Russian cars, and this
works in AvtoVAZ's favor, added Yeskov.

The first cars to arrive on the island will be at the disposal of taxi,
rental and tourist companies. If the trial run is successful, and Cuba
decides to buy more Russian cars, then a contract can be signed as early
as 2018.

The test batch of 300 cars will make it clear how to develop car exports
in the future. "Most likely, this volume of new cars seems optimal to
begin with and then everything will depend on sales results," said Yeskov.

According to Lada.ru, the average retail price of a Lada Largus on the
Russian market is 600,000 rubles ($10,000), and for a Lada Vesta the
price is 640,000 rubles ($11,000). Income levels in Cuba, however, are
very low and few residents can afford a new car.

"In the long term, Cuba could become an important market for AvtoVAZ but
not its main one because sales volumes are unlikely to meet the
manufacturer's export needs in full," said Yeskov.

In 2013, Cuban authorities ended the ban on imports and retail sales of
new cars, which had been in force since 1959. Until then, Cubans could
only buy and sell used cars, and only to each other. A small number of
imports, however, were supplied to the island from the USSR and
socialist bloc countries, but they mainly consisted of trucks and
ambulance or fire-fighting vehicles.